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Tax cuts to the rich is the prefer idea on how to promote and expand economic growth in supply side economics despite knowing it does not work as expected. Yet, this policy is usually the first choice in supply side run democracies like in the USA or now the UK when supply side promoters are in power.
Any policy that worsens inequality should be expected in practice to negatively affect economic growth as under extreme inequality or worsening inequality the traditional trickle down should be expected to be mute or not to work as intended. And this raises the question, tax cuts to the rich and the embudo effect, is that why the trickled down effect does not work as intended?
What do you think?
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Am in agreement with your findings, with respect to efecto embudo.
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Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
(Cited from the abstract).
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It is a question of ‚policy designing power‘ as you Lucio Muñoz mention correctly.
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Esteemed researchers,
I will need more insights and justifications into using "per capita consumption expenditure" as a measure of poverty.
Please refer me to applicable papers.
Thanks as always.
Ngozi
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I think that the consumption pattern is considered somewhat a measure or an indicator of the pattern of income distribution, and this may give an indication somewhat of the level of poverty or disparity in the distribution of income, if you will
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The past month or so has been super busy as I've moved my lectures from the classroom to the virtual video meeting "room" while naturally been concerned about student welfare. Yet, this new "Coronavirus condition" has forced me to pause for reflection. The result is that I appear to be less preoccupied with conceptual or theoretical questions than with more empirical questions that can demonstrate impact and help to combat suffering or social evils.
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If your observation that "people going crazy" is the current state of our world(s), then that could perhaps be a reality check in itself.
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Dear colleagues,
do you have some EXCEL template for calculate GINI coefficient and create Lorenzo curve? I find some R packages but I am not sure how to use it on my date with population and income by region.
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you can see this document to understand the gini formulas
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I'm writing a book that raises questions about the traditional meanings of justice and injustice.
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No, I wouldn’t say ignorance is the root of prejudice. Prejudice can be a learned outcome, but also throughout history some groups had tension with other groups, hence developing prejudice.
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The Investment Redistributive Incentive Model (IRIM).
Tourism holds the hopes of many in creating job opportunities for the masses of the unemployed globally. The poor growth of economies has failed to address the problems of unemployment, poverty and inequality. For growth to be impactful, foreign direct investment is considered one of the sources of the required impetuses. It is possible to incentivize both foreign (direct) and local investments. This paper, which was prepared using secondary sources of information, argues that it is possible to introduce incentives linked to investments in what is posited as the Investment Redistributive Incentive Model (IRIM). The IRIM rewards companies that support local ownership and control of enterprises through an incentive system en route to total liberation/local control of enterprises in whole geographic areas as the ultimate goal. The IRIM uses investment incentives such as tax cuts, breaks or relief as redistributive instruments to effect change through the reconfiguration of the management and ownership structures of companies. IRIM could be applied in any company, large or small, for equity and social justice. Foreign investors could also be linked to educational institutions in relation to facilitating the supply of skilled workers. Redistributive formulas become imperative to avert the various forms of societal dissonance because current trajectories are not sustainable where only a few get rich while the majority remain poor in a world trapped in a capitalistic and narcissistic modus operandi.
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I think the topic of investment and inequality is very interesting and relevant. It is also interesting to consider the relationship between investment, economic growth and economic inequality at national and regional level.
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From a recent world-wide study, that I was part of, that was the conclusion, putting it perhaps too bluntly. It was fascinating to be part of this expert commission but now the question is: what is to be done?
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Ronaldo Munck Congrats for the work.
Frederic Lowen is very close to my holistic view of cognition, economic action and human health.
In addition, I would say that the works of Silvio Gesell have a lot of economic options to offer for the next decades.
The sensitization of human thought and will for new economic bargaining models (the win/win economy) is the key to unlock the door for better living chances.
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Hi Folks,
I am looking for a validated survey tool to track changes in participants' notions of power and inequality in society. Rather than reinventing the wheel, I am wondering if anyone has, or has used one that I may be able to draw from in an upcoming study.
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you might find the following helpful
The Gilens and Page Measure of Political Inequality
However, it's more likely that you will find measures if you define your variables of interest more as it's unlikely that one measure can capture all aspects of power and inequality.
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In an open and globalized economy and considering the financial markets influence, I ask for your collaboration, from a theoretical point of view, to propose economics postulates that can reduce social inequality and give better solutions to complex problems such as sustainable growth and the equitable distribution of wealth. Thank you in advance.
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Sustainable development and their social and economic dimensions
Social development commitments are:
  Eradicate absolute poverty by a date to be determined by each country.
  Support full employment as one of the basic policy objectives.
  Promote social integration based on the promotion and protection of all human rights.
  Achieve equality and equity between women and men.
  Accelerated development in Africa Least developed countries.
  Ensure that social development goals are included in structural adjustment programs.
  Creating an "economic, political, social, cultural and legal environment that enables people to achieve social development".
  Enabling everyone to have equal access to education and primary health care.
  Strengthening cooperation for social development through the United Nations
Economic development is generally defined as the process through which a comprehensive and sustained change occurs, accompanied by an increase in real average income, an improvement in income distribution for the poor, an improvement in the quality of life and a change in the structure of production. According to this definition, development contains a number of elements, the most important of which are:
  Inclusiveness, development is a comprehensive change that involves not only economic, but also cultural, political and social.
  The continuous increase in real income average long period of time, this suggests that development is a long-term process.
  An improvement in the distribution of income in favor of the poor and the alleviation of poverty.
  Need to improve the quality of goods and services provided to individuals
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On returning from a visit trip collecting stories and making college class visits at Purdue University and Indiana University regional campuses in northwest Indiana, I have been weighing the state of publishing and whether writers from the "Rust Belt" "Flyover Zone" have a hope of being read outside their local region. This is not only applicable to the United States "Rust Belt" and "Flyover Zone" but analogous zones across the planet.
A key to Thorstein Veblen's theory of "conspicuous consumption" in his study _The Theory of the Leisure Class_ is social emulation. Each narrow band of socially-stratified society looks up to a slightly higher band and embarks on a furious program of "emulation" or mimicking their "betters." And when this is accomplished the active agent moves on to emulate a higher rung. Veblen helpfully supplies comparisons to bird behavior and the rituals of pre-industrial society, such as the Inuit "potlatch" as analogous to the upper-class debutante's "coming out" ball.
So, in the United States instance, any editor in New York or on the East Coast will see a less-status-y setting and instantly know "Sorry. This is not for us. Good luck elsewhere." Yes, taste matters. As Veblen writes, "a beautiful article which is not expensive is not accounted as beautiful" ("Theory" 132). With a slight shift, we might add that "a beautiful text not placed in an expensive setting is not beautiful."
What effect upon cognitive development and the mental evolution of creative writers does this process entail? The embodied subject so often enthusiastically dissected in pages of the Modern Language Association journal says little about the bodies and Foucaultian embodiment in the "Flyover Zone" or "Rust Belt," although I have addressed the issue by starting a "Rust Belt Literature" group in the MLA online commons. The same "emulative" avoidance seems to be at work since our new "Rust Belt Literature" MLA group is relatively low-traffic. Seven members at last count. MLA groups for the lesser poets of the Scottish Hebrides of the late 18th Century often boast more members than this.
Some creative writing students have devised work-arounds such as (1) pretending to have lived in Paris or (2) writing in a vacuum where characters walk in a vague setting like dry ice fog in a low-budget film to disguise the less-status-y real setting. These texts show some initiative and focus in CW students. However, perhaps, creative writing classes could find a more accurate name in flyover country such as Evasive Writing? Does Veblen fit?
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Novelists didn't need to be told about conspicuous consumption and waste and the leisure class by the wonderful Veblen. Certainly he formulated them in a systematic way, but Dickens, Thackeray, Zola, didn't require his orderly exposition to make the point about patterns of wealth.
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Is the Indian-born cultural theorist Gayatri Spivak's "subaltern" theory a valid approach to the US Rust Belt dominant narrative?
This question grows from the study of symbolic conversion theory and the work of Gayatri Spivak on inequality and voice. especially her landmark essay "Can the Subaltern speak?"
Ernest Bormann called words and phrases applied to people, events, and places not present "fantasy themes." These themes tend to cluster into positive groups around one's own region or group and negative clusters around "the other."
When a group of people or a region is named with what Bormann would describe as negative "fantasy themes" by outside media, are they colonized by economic and media to the extent that they have been effectively silenced? The very fact that the US Rust Belt region and its inhabitants have no voice in the US media then be cited as evidence that they are incapable of articulating a narrative for themselves and may be described with external narratives with no necessity of dialogue.
So is this rhetorical situation the beginning of a true caste system?
The dirty jobs are not only held in disdain by traditional elites but also progressive ecology-minded media. Thus, the dominant narrative follows that omission is acceptable and that there is no need to hear from this region, the rhetorical construct called The Rust Belt.
Spivak usually is cited for Western colonial issues but can this sort of silence be analyzed rhetorically by her methods?
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Thank you, Colleague Altmann.
I had an idea that also embodies this separation over "nature" and "the environment" as signs of privilege. There is a luxury aspect to the environmental movement that Thorstein Veblen probably would have recognized as some kind of conspicuous consumption in terms of virtuous selectivity--organic foods, living among forest and sea animals, etc.
None of these are possible in the more industrial zones. And that causes a rupture of the self. The person is supposed to leave the industrial zones because employment is so limited, but also to shed a sense of self from there, molded by that setting. I wrote in a question about using Veblen for literary analysis. As important illustration is the huge secret that Gatsby is concealing: his father lives in The Valley of Ashes, a dumpy town where solid waste is burned nearby. So we could look through many novels via the lens of management of solid waste, just as some scholars have been re-reading novels as to type and rates of fuel consumption.
Rhetorical analysis of novels regarding solid waste management can give a look at how the physical "discussion" is framed in terms of the rhetoric of place and things. I don't know if I'll have time to do a major study of this issue, but this method will reveal much about the growing separation of the classes. Although all classes generate solid waste, almost all waste that isn't placed on water stays in the industrial or rural poverty areas.
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I quote from the Columbia University economist and Nobel Laureate, Joseph Stiglitz:
Asymmetries of Information and Economic Policy
This year's Nobel Prize in Economic Sciences went to George Akerlof of the University of California at Berkeley, Michael Spence of Stanford University, and myself for our work on "asymmetry of information.'' What is that work about and why did we undertake it?
For two hundred years, economists used simple economic models that assumed that information was perfect - i.e. that all participants have equal and transparent knowledge of the relevant factors. They knew that information wasn't perfect, but hoped that a world with moderate imperfections of information would be akin to a world with perfect information. We showed that this notion was ill-founded: even small imperfections of information could have profound effects on how the economy behaved.
The Nobel committee cited our work on `"asymmetries of information,'' an aspect of imperfections of information caused by the fact that different people in a market know different things. For example: the seller of a car may know more about his car than the buyer; the buyer of insurance may know more about his prospects of having an accident (such as how he drives) than the seller; a worker may know more about his ability than a prospective employer; a borrower may know more about his prospects for repaying a loan than the lender. But asymmetries of information are only one facet of information imperfections, and all of them - even when small - can have large consequences.
George Akerlof and I were classmates at MIT in the early 1960s. We were taught the standard models of the day, but they made little sense to us. These models rather simplistically said that demand equaled supply. The joke was that you could teach a parrot to be an economist simply by repeating "demand and supply.'' This produced rather curious results. If the demand for labor equaled the supply, for example, there couldn't be any unemployment.
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See:
Part of the interest of the concept for policy studies is the implication that under conditions of asymmetric information, market economies perform poorly; and presumably, the greater the asymmetries, the worse the performance. There is reason to think that asymmetries of information have been growing quite significantly.
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The Economist explains economics: What is information asymmetry?
MARKETS frequently present consumers with products whose quality is difficult to judge in advance. A television, for instance, might look good in the shop, but for how long will it work? Warranties are one way of overcoming the uncertainty. Big brands offering staid but standardised products are another; the hipsterish coffee shop may well have the best brew, but the neighbouring Starbucks hopes you are unwilling to take a risk finding out. Yet despite the pervasiveness of the problem, and of solutions to it, not until the 1970s did economists begin to incorporate “asymmetric information” into their thinking...
George Akerlof, your colleague, was at the forefront of this effort. In his seminal 1970 paper “The Market for Lemons”, Mr Akerlof asked what would happen to the market for used cars if buyers could not tell between good and bad...
Peter Spence, another pioneer of information economics, focused on “signalling”. His example was the labour market...
Information asymmetry remains a tricky problem for policymakers. Adverse selection is plaguing America’s Affordable Care Act, better known as “Obamacare”...
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Can someone please suggest some good articles/journals about this?
Thank you
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Hello Jane van der Merwe
please check the attachments which are given below
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Dear friends
Last weeks, thousands of persons around the worl protested against the regression of the consideration for scientific research in the world. Indeed, even in developped countries, politics consider less and less science and scientists. Is it the case in your countries?  how can we improve this consideration?
Looking forward your feedbacks
Best regards
B.B.
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The cult of backwardness is evident in some research sectors as small producers motivated by ideology in Brazil.
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It is a fact that richer countries have financial structures which are more biased to financial market, while poorer countries are more bank-dominated.
In the following picture, in the horizontal axis from left to right they are high-income OECD countries, high-income nonOECD countries, upper-middle-income contries, lower-middle-income countries and low-income countries, respectively. The vertical axis is financial structure and higher value represents more finacial market dominated. We can see from the picture that roughly financial market is more important in richer countries than in poorer countries. But, why high-income nonOECD countries have a finacial structrue that is more market dominated that high-income OECD countries?
How can we explain this phenomenon?
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NonOECD are also economically dependent on OECD's economies
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Hi I am looking for data on the top income 10% . Is there anyway I can construct it thank you ?
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The given  above data bank will give you any information on incomes of any nations and you can as well explore some methodologies on how they are measured.
"The World Wealth and Income Database - WID
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Social closure is an important mechanism leading to inequality in life outcomes. We are particularly interested in items measuring how people feel about processes of social closure, to what extent they feel them legitimate or not.
Thanks!
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Maybe you can look at the ISSP module on social inequalities:
Best,
Loris
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As New York has mapped the income levels along individual subway lines, earnings range from poverty to considerable wealth, namely income inequality exist obviously.
But how and when such inequality form along the time, i.g. before, in the middle and after the construction of metro? The procedure is rather complex, relating with the change of accessibility, spillover of land price and house price, agglomeration of economic activities, increase of commercial and housing investment, job attraction, etc.
Does this inequality has a spatial pattern? That is the spatial difference of the degree of inequality between the regions near to the metro and the ones slightly far away from the metro.  And how does spatial pattern of income inequality evolve or change before, in the middle and after the construction of metro? Maybe the evolution of such income inequality will be impacted greatly by the density of metro, gentrification, sub-urbanization, urban renewal, built environment, etc.
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Dear Guo,
Very interesting question. We have done a research on this topic measuring social and spatial inequalities change in urban area after a new transport measure. See Souche, Mercier, Ovtracht in Urban Studies 2016 (you can find the paper in my page researchgate) . We have use the same methodology for evaluating the impact of a new subway line (but not published). Best. Stephanie
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How does transport infrastructure within city, such as metro, affect the urban economic growth? Will it further result in spatial social/economic inequality? If it will, what is the process? 
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I think  that an improvement of transport infrastructure works in several directions: a) it increases utility of citizens saving their money and time on transportation between their houses and place of work, b) it makes this city more attractive for new migrants and commuters from rural neighborhood. An equilibrium city size is when city attractiveness is balanced by congestion effects. Hence, growing attractiveness of one city will cause migration to it from other areas.
If we focus on scale economies, the growth of population will stimulate economic growth as well. But if a city does not have technology or production responsible for economic growth, higher size will only increase pollution and make the citizens worse off. I think that social inequality dynamics depends on policy, but in non-controlled capitalism (free market) the social inequality in a city is typically increasing with growth.
As for an optimal city size and the role of scale economies, you can look at section 3 in my article: https://www.researchgate.net/publication/305307665_Population_Structures_in_Russia_Optimality_and_Dependence_on_Parameters_of_Global_Evolution
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Dear all,
My PhD research has taken off and my interest is on "financial reforms and income inequality in Africa (1980-2015)". Thus, I'll appreciate if anyone can suggest to me papers bothering on general theories of income inequality.
However, to streamline my arguments, I'm focusing on an aspect of financial reforms which is the availment of credit facilities to households, so theories specific on credit and income inequality will be most appreciated.
Also, I'll welcome anyone that is interested in collaborative work regarding this research.
Thanks as always as I await responses.
Ngozi
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Dear research community I am working on my PhD dissertation and my topic is "urban sprawl, infrastructure deficiency and economic inequalities with evidence from Karachi". can I have suggestions regarding quantifying the urban sprawl and subsequently applying the model on causative variables i.e infrastructure deficiency and economic inequalities.
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Hello colleague,
I have not directly worked on the subject of urban sprawl, but while working on poverty alleviation and sustainable development, I had the opportunity to study the Kachchi abadis (shanty towns) across the capital city of Islamabad.
In case you plan to conduct a survey, you could get most of the quantitative data from the district administration or city's development authority who keep track of rural-urban migration. For qualitative information, you could do some probing into the reasons.
In my case I found both push and pull factors. For example, lack of opportunities in the village, family disputes, loss of home due to natural disaster as well as searching for job/work opportunities, looking for better social services e.g. medical services, access to drinkable water, energy and space.
A particular phenomena was the Real Estate Mafia that would grab a piece of state land and bring people from the village to settle temporarily. After a certain period of time, the city administration is being pressurized to legalize the locality and then the Mafia will evict the poor residents against petty financial rewards and develop the area commercially. Hitting the jackpot at the cost of poor dwellers. You may find out a lot more by talking to settlers and also observing over a period of time as to how the whole phenomena take place.
I will be keen to know your results.
Best of success.
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According to Frances Stewart, horizontal inequalities (inequalities between groups) in its various dimensions (economic, socio cultural and political ) are the main sources of conflict in most conflict stricken countries.  It is argued that economic inequalities provide fertile ground for conflict, socio-cultural inequalities bind groups together, and political inequalities provide incentives for leaders to mobilize people for rebellion. Is there a threshold of the extent of such inequalities ( in one or all dimensions)   beyond which it spur grievances and mobilize people leading to conflict ? or is it the mismatch between  these three dimension driving the violent conflict?  
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Conflict is not simply a product of a "land grab."  To better understand the sources of conflict, you are better served examining the concepts of relative depravation and opportunity cost of conflict.  Institutional instability, resource scarcity, food insecurity, etc., all alter the opportunity cost of conflict.
To your point, there is very little evidence of thresholds because it is a multi-dimensional problem.  And, it is not just an economic problem.  There are social, political, and economic dimensions interacting, and "inequality" is not particularly pertinent.  That is, it is "relative inequality" that matters.  And that is only operational in the context of weak institutions that prevent Coasian bargaining in the first place.  
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Minimum wages are calculated by interpreting national laws. As the recent EC statistics shows (attached), the results are quite questionable.
Some examples:
- Russia has a lower minimum wage than Ukraine but people earn
  three times more in average in Russia.
- Germany seems to have a competitive minimum wage, but only if
  you have a 38-hours-contract. Today 12 million employees work
  part time, many for 450 Euro only ("Minijob").
- Slovenia seems to have a very low minimum wage. But in Slovenia
  people earn more than in any other Eastern European country.
- Italy doesn't have a minimum wage but in many parts of Italy people
  earn like in Austria and Germany (Lombardy, Venezia, Toscany, Rome)
- UK seems to have the highest average income. But the costs for living in
 UK  - despite the low taxes - are much higher than e.g. in Germany,
 Belgium and Netherlands.
These are only examples. Does it make sense to compare minimum wages without considering the real labour conditions and the price reality?
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In Romania , authorities introduced in 2000  the ''minimum monthly consume basket", containing food and non-food products, also services. (the Emergency Ordinance no.217/2000).  The minimum wage was then settled according to this index. But in 2005, this law was abandoned and now with the minimum wage, settled by the government, it is virtually impossible to cover all costs for one month, taking into account that the cost of goods and services is now more or less the same like in the developed countries of Western Europe. Besides, the phenomenon of people working without official contracts is quite common, so, the minimum wage is a fact only in the public institutions, and just symbolic  in the private sector.
It is an error to compare minimum wages of different countries without taking into to account the cost of life and other factors.  Otherwise, the research is just a nice exercise of applied mathematics.
If you use google translate from Romanian to English, you can find out more details in these articles: 
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Concentration of output, wealth, and assets has no limits as of yet. The market economy does not favor either of the binding upper and lower benchmarks. But the consequences are really painful for the humanity. Can't be there any understanding among the economists and other social scientists on the limits of inequality which can be enforced institutionally?
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If there were a limit as Mohammed ask him, the generalized public opinion is that the neoliberalism has been the extrem inequality model. The Davos Economic Forum so have it considered. Extreme inequlity diminish the economic growth, reduce human development oportunities and eliminates the competividad of micro y median enterprises; then inequality is a very important economic and social problem which public economic and social policy must struggle against it. Mario 
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I am struggling in a purely abstract way with the question of the relationship between income distribution and the type of goods produced in an economy. If someone has an idea or a good reference I'd be happy to know about it.
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Yes, income distribution has an influence on a variety of goods produced. A poor country will equal income (like China was 20 years ago and Northern Korea today) will produce a lot of bicycles, few cheap cars and no expensive cars (maybe except for few party leaders).
UK before Thatcher's reforms was a rich country with few variation in income (relatively to other capitalist economies) and many people had access to cars, including more expensive.
Income polarization in a country (like Russia since 1990s) causes an increase in a fraction of luxury goods, including Ferrari.
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Undernourishment means that a person is not able to acquire enough food to meet the daily minimum dietary energy requirements, over a period of one year. FAO defines hunger as being synonymous with chronic undernourishment. Higher economic growth has not been  fully translated into higher food consumption.
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Evaluation of programmes like ICDS in India has revealed positive results.
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Is there a contradiction in policy recommendations with regard to capital taxation?
The classic Chamley-Judd result suggests that capital taxes should be zero in the long run. Straub and Werning revisit this result and come to a different conclusion. Furthermore, scholars like Piketty or Benhabib suggest to use capital taxes to reduce rising wealth inequality.
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Here is a short history of economics view on the matter:
The Physiocrats believed that taxes should be only on land, since agriculture was the only source of a net product. Other taxes will eventually fall on land. For example, because wage was at the subsistence level, taxing labor would shift the burden to land. The idea of land tax only was supported by James and John Mill, and Henry George.
Adam smith perceived that capital supports the productivity of labor and accumulation. Tax on capital should therefore, be minimal and can be so by keeping the size of the government small.
As Malthus put it: “many of the taxes which fall on the capital of the farmer and the wages of the labourer, as well as those directly imposed on themselves, they must necessarily feel it in the diminution of that portion of the whole produce, which under other circumstances would have fallen to their share.” (Principles)
Stanley Jevons wrote: “We must regard labour, land, knowledge, and capital as conjoint conditions of the whole produce, not as causes each of a certain portion of the produce. Thus in an elementary state of society, when each labourer owns all the three or four requisites of production, there would really be no such thing as wages, rent, or interest at all. Distribution does not arise even in idea, and the produce is simply the aggregate effect of the aggregate conditions. It is only when separate owners of the elements of production join their properties, and traffic with each other, that distribution begins, and then it is entirely subject to the principles of value and the laws of supply and demand.” (Principles)
Now, at the modern textbook level, we speak of a desired level of capital, which decreases with the rental cost of capital and increases with the level of output/income in the future when the capital is employed. The future time may be short as a week or long as many years, so a permanent measure of income is desirable. Note that corporate taxes and investment tax credit enter on the rental cost side. The former tends to lower the desired rate of capital. This in turn will slow the growth of investment as the gap between actual and desired capital via the flexible accelerator will be narrowed. This might lower capital share in output, but lower output growth as well say via the Keynesian multiplier.
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I need a recent measure of income inequality by Metropolitan Statistical Area. I found a source for the top 50 MSAs, but I'd like ALL MSAs. More difficult would be a way to find or calculate the means of each quintile and the top 5%. I'm using the IPUMS ACS 2007-11 5-year sample, and I've dropped the missing values (coded 9999999), but I'm not sure if I should include negative HH incomes as well.
I might be open to using a GINI coefficient instead if anyone knows of a recent list by MSA.
Any suggestions? Thanks!
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Dear Rick,
I attach a little spread sheet that shows an algorithm for the calculations. The source of it is listed on top. At the bottom, I explain how to find quintiles. Hope its what you are looking for.
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The Yitzhaki index of relative deprivation mathematically relates to the Gini index of income inequality. If we scale the Yitzhaki score to 0-1, then the average Yitzhaki = Gini. So is it possible to estimate a “synthetic” Yitzhaki score for an individual in a survey when the only variables available are: (1) individual income, (2) average income of the individual’s neighbourhood, and (3) Gini index of the neighbourhood. I cannot calculate the Yitzhaki in the normal way because I haven’t done a census. Any help would be appreciated. thanks
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Relative deprivation of a person depends on her reference group. By an appropriate assumption on the reference group structure, the RD can be zero. See my European Economic Review (1982) entitled "Relative deprivation and Economic Welfare".
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I am now reading Piketty's Capital in the 21st Century. It is a wonderful statistical research work and should be a model that all economists must learn from it. I have no intention to throw any doubt on his fact findings.
My question is concerned with the logic which connects the fact r >g and the rising inequality of income and wealth.
In the Kaldor-Pasinetti framework of growth and distribution, we have the following long run relation
        g = scr,
where sc stands for the capitalists' propensity to save (I omit all the necessary conditions for the validity of this equation). See equation (14) of Pasinetti (1962) Rate of Profit and Income Distribution in Relation to the Rate of Economic Growth. Review of Economics Studies 29(4): 267-279. , p.272) .
In this case the rate of investment and by consequence the rate of accumulation of capital is equal to the growth rate. Then capital assets or the total wealth grow at the same rate as the total income and therefore the workers' income (if we assume that workers' share in the income remains constant).
Can anyone explain Piketty's logic? I want to know in what sense Piketty calls relation r>g the driving force of rising inequality.
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I think that Piketty’s argument is simply that an interest rate greater than the growth rate implies that capital income will grow faster than wage income with a consequent worsening of income distribution. One way to explain Piketty’s argument within the Harrod_Domar framework, however, is presented in the document in attach.
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How can i find Atkinson's Index for different quintiles?  Would that provide additional information than the index of the overall data?
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Dear S.J.,
the parameter (epsilon) is a parameter in order to integrate Rawl's concept of social justice (see the annex of my first contribution: de Maio, 2007, p. 850). So, the choice of the parameter (epsilon) is based on a normative/ethical judgement/assessment. From this point of view, the value "social justice" determines the action in this process of judgement / assessment. (Background: Atkinson Index is a parameter for welfare and welfare can't be measured without definining the normative frame)
So the choice of parameter (epsilon) depends on the weight, you want to give to the value "social justice". The parameter (epsilon) was designed in order to estimate the dimension of "inequality aversion". So, based on the following - sorry German-speaking - publication:
Unger et al (2013): Verteilungsbericht 2013. Trendwende noch nicht erreicht. WSI Report (10). Download: http://www.boeckler.de/pdf/p_wsi_report_10_2013,
you can define, related to chapter 3.1, pp. 19-21:
parameter (epsilon) = 0,5: little inequality aversion
parameter (epsilon) = 1,0: medium inequality aversion
parameter (epsilon) = 2,0: great inequality aversion
All reports, that I know, emphases that's important to choose a great inequality aversion (parameter (epsilon) = 2,0) in order to consider very low income levels. Personally, I assume, it could be valuable, to calculate the Atkinson Index with the three dimensions (see the diagrams on pp. 19-21, chapter 3.1) in order to illustrate the differences. Based on this, you can demonstrate the utility of a great inequality aversion.
Perhaps, you find a classification of parameter (epsilon) in the following original publications of Atkinson:
Atkinson Anthony (1970): On the Measurement of Inequality. Journal of Economic Theory, 2, S.244-263, 1970.
Atkinson Anthony (2007): Measuring Top Incomes: Methodological Issues. Top Incomes over the Twentieth Century. A contrast between European and English-Speaking Countries, Oxford University Press.
So finally, I would like to state, that the choice of parameter (epsilon) doesn't depend on a given income distribution (your question above), because it depends on the normative definition of the parameter (epsilon).
Kind regards, Detlef
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Article on Digital divide.
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Hello,
The Pew Research Center published their report "Americans and Their Cell Phones" in 2011 http://www.pewinternet.org/files/old-media/Files/Reports/2011/Cell%20Phones%202011.pdf.  I was surprised by some findings.  For instance, the vast majority of adults and teens from households with incomes of less than $30,000 use the internet.
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Sen states that a person's position in a social arrangement can be judged in two different perspective. One he called the actual achievement and other is the freedom to achieve. achievement is concerned with what we manage to accomplish, and freedom with the real opportunity that we have to accomplish what we have value. He argument that the two need not be congruent. Inequality can be viewed in terms of achievement and freedoms. they are not coincide. The distinction between achievement and freedom is central to social evaluation.
Now we turns on real issue. Most of the economies is living in the atmosphere of capitalist rule, who advocates the equal opportunity to each person. The real behavior is just opposite. It creates a lot off inequality in the society and abandon the individual access to resource. Thus, the opportunity of real and equal opportunity disappeared. The question is how can real opportunity be materialized in a capitalist economy?
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This is a complicated issue and I want to point out only one topic. In my book (attached below, p. 134), I proved that the share of national income for the poorest decile correlates negatively with the share of national income for the richest decile. Because the share of national income for the poorest decile is very small compared to the share of national income for the richest decile it cannot cause this dependency. My conclusion is that the reason is political and I also found that Latin America had the highest income inequality.
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The income disparity in most of Africa and the developing world is a major problem to development, and improve in the lives of their people.
It is no doubt, that in most of the developing countries the incomes differences between the low income earners and high income earners are high leading to the poor getting poorer and while the rich are getting richer. This is complete quagmire to development.
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I have studied this question in my recent book (see below). Even though, it is very difficult to draw general conclusions about the impact of income inequality in economic development, my study revealed some patterns in inequality that may interest you.
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I am looking for the GINI coefficients (any year will do at this point) for the following countries: Montserrat, Grenada, United Arab Emirates, Anguilla, Barbuda, Dominica, Myanmar, Cayman Islands, Libya, Niue, Oman, Tonga, Cook Islands, Kiribati, Kuwait, Nauru, Solomon Islands. Recommendations for sources, citations, or lesser known databases are welcome.
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Please see my article enclosed, using an alternative database
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Is Gini coefficient the only way to measure inequality? Are there some superior measures i.e. that can provide some more details?
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There is a some alternative measures. For instance, Generalized Entropy Indexes, Atkinson Index, Piesch index, Kakwani index. Each measure can exhibit differnt properties. So, for a detailed explanation, see, for example: Measuring Inequality - Frank A. Cowell
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Piketty proposes a simple underlying equation r>g, meaning that the return on capital (property, stock and other forms of ownership) is consistently higher than economic growth.
Piketty strongly suggests that the structures of capitalism are not only regenerate worsening inequality, but now drive us toward a system of economic peonage and political autocracy.
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Never too late Christian. Thanks
Even more timely a debate, at least in Australia, with some very provocative economic remedies being suggested for a fiscal crisis that exists depending on who you read.
The implications, if all were implemented might be a dramatic redistribution away from the social sectors, and widen the inequality gap.
I wonder if Piketty's approach can be applied to Australia's macro-economy?
Cheers
Anne
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2015 -The MDGs end year is few miles away and propositions are on top gear for the SDGs. The challenge is that most of the promises latent in MDGs have not being achieved (up to the desired targets). The question now is: what can developing countries learn from the MDGs and how can they better equpped/aligned for the SDGs
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there is a lot that developing countries can learn from the experience of trying to achieve the MDGs but the most important lesson that can be taken out of the experience is that it takes a lot of political will to implement the necessary reforms required to lift millions out of poverty and sustain developmental progress. This fact was recognized at the inception of the MDGs but it's effect was wildly underestimated. whether the SDGs will be achieved or not will critically depend on the amount of political will and appetite for change that the governments of developing countries have.
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I'm currently writing a dissertation along this theme.
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You may want to have a look at the following paper:
It focuses on the brain drain faced by the Small Island Developing States
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Marcel Lenoir (1913) found that the price of gold was the same in 1800 as in 1910, with a 2.8% increase from the mines of the world. Since 1970 gold has dramatically increased and yet inequality has grown dramatically and wages stagnated, while asset classes have exploded in value. Related?. Lenoir, Etude sur la Formation et le Mouvement des Prix, Paris, 1913.
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Putting aside Marxian theories of economic collapse, which in my view are no more valid now than they were in the mid-19th century, there is a really interesting issue here. It has nothing to do with the price of gold, whose value until 1971 was determined by statute (a bit more loosely during the Bretton Woods period of 46-71 than during the classical gold standard), but the impact of monetary policy on the distribution of income. QE is a policy that the Fed hopes will depress long-term interest rates (short rates are already at zero) and boost equity and house prices. This means that current holders of wealth, if the policy has its desired effect, benefit at the expense of savers who are trying to build wealth but are getting low yields and seeing other assets rise rapidly in price. I am not convinced that QE was the cause to the 30% rise in US equity prices in 2013 but there is little doubt that holders of equities became wealthier relative to everyone else. Meanwhile, those living on fixed incomes see the current income plunge. What does a $1,000,000 one-year bank CD generate in income? Only around $5,000! $2,000,000 of assets in bank CDs doesn't get a person over the Federal Poverty Line (FPL) is the US! Since the share of equities in wealth rises as household income and assets rise, QE, if successful, makes the distribution of income more unequal.